12th Standard Accountancy English Medium - Retirement and Death of a Partner 5 Mark Book Back Question Paper and Answer Key 2022 - 2023 | QB365

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12th Standard Accountancy English Medium - Retirement and Death of a Partner 5 Mark Book Back Question Paper and Answer Key 2022 - 2023

Published on: 01/09/2022

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Questions:

Generic 5

19 x 5 = 95

Vijayan, Sudhan and Suman are partners who share profits and losses in their capital ratio. Their balance sheet as on 31.12.2018 is as follows Balance Sheet as on 31.12.2018

Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Building	80,000
Vijayan	70,000		Stock	45,000
Sudhan	50,000		Debtors	25,000
Suman	30,000	1,50,000	Cash at bank	20,000
General reserve		18,000	Cash in hand	15,000
creditors		17,000
		1,85,000		1,85,000

Suman died on 31.3.2019. On the death of Suman, the following adjustments are made:
(i) Building is to be valued at Rs. 1,00,000
(ii) Stock to be depreciated by Rs. 5,000
(iii) Goodwill of the firm is valued at Rs. 36,000
(iv) Share of profit from the closing of the last financial year to the date of death on the
basis of the average of the three completed years’
profit before death. Profit for 2016, 2017 and 2018 were Rs. 40,000, Rs. 50,000 and Rs. 30,000 respectively.
Prepare the necessary ledger accounts and the balance sheet immediately after the death of Suman.

Varsha, Shanthi and Madhuri are partners, sharing profits in the ratio of 5:4:3. Their balance sheet as on 31^st December 2017 is as under:

Balance Sheet as on 31st December 2017
Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Premises	1,20,000
Varsha	80,000		Stock	40,000
Shanthi	60,000		Debtors	50,000
Madhuri	20,000	1,60,000	Cash at bank	18,000
General reserve		48,000	Profit and loss A/c (loss)	12,000
Sundry creditors		32,000
		2,40,000		2,40,000

On 1.1.2018, Madhuri died and on her death the following arrangements are made:
(i) Stock to be depreciated by Rs. 5,000
(ii) Premises is to be appreciated by 20%
(iii) To provide Rs. 4,000 for bad debts
(iv) The final amount due to Madhuri was not paid
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after death.

Rajesh, Sathish and Mathan are partners sharing profits and losses in the ratio of 3 : 2 : 1 respectively. Their balance sheet as on 31.3.2017 is given below

Liabilities	Rs	Rs	Asset	Rs
Capital accounts:			Premises	4,00,000
Rajesh	4,00,000		Machinery	4,20,000
Sathish	3,00,000		Debtors	1,60,000
Mathan	2,50,000	9,50,000	Stock	3,00,000
General reserve		1,20,000	Cash at bank	20,000
Creditors		50,000
Bills payable		1,80,000
		13,00,000		13,00,000

Mathan retires on 31st March, 2017 subject to the following conditions:
(i) Rajsh and Sathish will share profits and losses in the ratio of 3:2
(ii) Assets are to be revalued as follows:
Machinery Rs. 3,90,000, Stock Rs. 2,90,000, Debtors Rs. 1,52,000.
(iii) Goodwill of the firm is valued at Rs. 1,20,000
Prepare necessary ledger accounts and the balance sheet immediately after the retirement of Mathan.

Saran, Arun and Karan are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. Their balance sheet as on 31.12.2016 was as follows:

Liabilities	Rs	Rs	Asset	Rs	Rs
Capital accounts:			Buildings		90,000
Saran	60,000		Machinery		40,000
Arun	50,000		Investment		20,000
Karan	40,000	1,50,000	Stock		12,000
General reserve		15,000	Debtors	25,000
Creditors		35,000	Less: Provision Provision for bad debts	1,000	24,000
			Cash at bank		44,000
		2,00,000			2,00,00

Karan retires on 1.1.2017 subject to the following conditions:
(i) Goodwill of the firm is valued at Rs. 21,000
(ii) Machinery to be appreciated by 10%
(iii) Building to be valued at Rs. 80,000
(iv) Provision for bad debts to be raised to Rs. 2,000
(v) Stock to be depreciated by Rs. 2,000
(vi) Final amount due to Karan is not paid immediately
Prepare the necessary ledger accounts and show the balance sheet of the firm after retirement.

Kannan, Rahim and John are partners in a firm sharing profit and losses in the ratio of 5 : 3 : 2. The balance sheet as on 31^st December, 2017 was as follows:

Liabilities	Rs	Rs	Asset	Rs
Capital accounts:			Buildings	90,000
Kannan	1,00,000		Machinery	60,000
Rahim	80,000		Debtors	30,000
John	40,000	2,10,000	Stock	20,000
Workmen compensation fund		30,000	Cash at bank	50,000
Creditors		20,000	Profit and loss A/c (loss)	20,000
		2,70,000		2,70,000

John retires on 1st January 2018, subject to following conditions:
(i) To appreciate building by 10%
(ii) Stock to be depreciated by 5%.
(iii) To provide Rs. 1,000 for bad debts
(iv) An unrecorded liability of Rs. 8,000 have been noticed.
(v) The retiring partner shall be paid immediately.
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after retirement.

Manju, Charu and Lavanya are partners in a firm sharing profits and losses in the ratio of 5 : 3 : 2. Their balance sheet as on 31^st March, 2018 is as follows:

Liabilities	Rs	Rs	Asset	Rs
Capital accounts:			Buildings	1,00,000
Manju	70,000		Furniture	80,000
Charu	70,000		Stock	60,000
Lavanya	70,000	2,10,000	Debtors	40,000
Sundry creditors		40,000	Bills receivable	50,000
Profit and loss A/c		50,000	Cash at bank	20,000
		3,00,000		3,00,000

Manju retired from the partnership firm on 31.03.2018 subject to the following adjustments:
(i) Stock to be depreciated by Rs. 10,000
(ii) Provision for doubtful debts to be created for Rs. 3,000.
(iii) Buildings to be appreciated by Rs. 28,000
Prepare revaluation account and capital accounts of partners after retirement

Chandru, Vishal and Ramanan are partners in a firm sharing profits and losses equally. Their balance sheet as on 31^st March, 2018 is as follows:

Liabilities	Rs	Rs	Asset	Rs	Rs
Capital accounts:			Furniture		60,000
Chandru	60,000		Machinery		1,20,000
Vishal	70,000		Sundry debtors	33,000
Ramanan	70,000	2,00,000	Less: Provision for doubtful debts	3,000	30,000
Bills payable		80,000	Bills receivable		50,000
			Cash at bank		20,000
		2,80,000			2,80,000

Ramanan retired on 31^st March 2019 subject to the following conditions:
(i) Machinery is valued at Rs. 1,50,000
(ii) Value of furniture brought down by Rs. 10,000
(iii) Provision for doubtful debts should be increased to Rs. 5,000
(iv) Investment of Rs. 30,000 not recorded in the books is to be recorded now.
Pass necessary journal entries and prepare revaluation account.

Vinoth, Karthi and Pranav are partners sharing profits and losses in the ratio of 2:2:1. Pranav retires from partnership on 1^st April 2018. The following adjustments are to be made.
(i) Increase the value of land and building by Rs. 18,000
(ii) Reduce the value of machinery by Rs. 15,000
(iii) A provision would also be made for outstanding expenses for Rs. 8,000.
Give journal entries and prepare revaluation account.

Roja, Neela and Kanaga are partners sharing profits and losses in the ratio of 4:3:3. On 1^st April 2017, Roja retires and on retirement, the following adjustments are agreed upon.
(i) Increase the value of building by Rs. 30,000.
(ii) Depreciate stock by Rs. 5,000 and furniture by Rs. 12,000.
(iii) Provide an outstanding liability of Rs. 1,000
Pass journal entries and prepare revaluation account.

10.

Distinguish between sacrificing ratio and gaining ratio.

11.

Ramesh, Ravi and Akash are partners who share profits and losses in their capital ratio. Their balance sheet as on 31.12.2017 is as follows:

Balance Sheet as on 31st December, 2017
Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Plant and machinery	45,000
Ramesh	30,000		Stock	22,000
Ravi	30,000		Debtors	15,000
Akash	20,000	80,000	Cash at bank	10,000
General reserve		8,000	Cash in hand	4,000
Creditors		8,000
		96,000		96,000

Akash died on 31.3.2018. On the death of Akash, the following adjustments are made:
(i) Plant and machinery is to be valued at Rs. 54,000
(ii) Stock is to be depreciated by Rs. 1,000
(iii) Goodwill of the firm is valued at Rs. 24,000
(iv) Share of profit of Akash is to be calculated from the closing of the last financial year to the date of death on the basis of the average of the three completed years’ profit before death. Profit for 2015, 2016 and 2017 were Rs. 66,000, Rs. 60,000 and Rs. 66,000 respectively.
Prepare the necessary ledger accounts and the balance sheet immediately after the death of Akash.

12.

Sundar, Vivek and Pandian are partners, sharing profits in the ratio of 3:2:1. Their balance sheet as on 31st December, 2018 is as under:

Balance Sheet as on 31st December, 2018
Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Land	80,000
Sundar	50,000		Stock	20,000
Vivek	40,000		Debtors	30,000
Pandian	10,000	1,00,000	Cash at bank	14,000
General reserve		36,000	Profit and loss A/c (loss)	6,000
Sundry creditors		14,000
		1,50,000		1,50,000

On 1.1.2019, Pandian died and on his death the following arrangements are made:
(i) Stock to be depreciated by 10%
(ii) Land is to be appreciated by Rs. 11,000
(iii) Reduce the value of debtors by Rs. 3,000
(iv) The final amount due to Pandian was not paid
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after death.

13.

Muthu, Murali and Manoj are partners in a firm and sharing profits and losses in the ratio 3 : 1 : 2. Their balance sheet as on 31^st December, 2018 is given below:

Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Machinery	45,000
Muthu	20,000		Furniture	5,000
Murali	25,000		Debtors	30,000
Manoj	20,000	65,000	Stock	20,000
General reserve		6,000
Creditors		29,000
		1,00,000		1,00,000

Manoj retires on 31^st December, 2018 subject to the following conditions:
(i) Muthu and Murali will share profits and losses in the ratio of 3 : 2
(ii) Assets are to be revalued as follows:
Machinery Rs. 43,000, stock Rs. 27,000, debtors Rs. 28,000.
(iii) Goodwill of the firm is valued at Rs. 30,000
(iv) The final amount due to Manoj is not paid immediately
Prepare necessary ledger accounts and the balance sheet immediately after the retirement of Manoj.

14.

Raghu, Ravi and Ramesh are partners in a firm sharing profits and losses in the ratio of 2 : 3 : 1. Their balance sheet as on 31^st March, 2019 was as follows:

Liabilities	Rs.	Rs.	Asset	Rs.	Rs.
Capital accounts:			Buildings		60,000
Raghu	30,000		Machinery		70,000
Ravi	40,000		Stock		20,000
Ramesh	20,000	90,000
Reserve fund		36,000	Debtors	18,000
Sundry creditors		33,000	Less Provision for bad debts	1,000
		1,76,000			1,76,000

Ramesh retires on 31.3.2019 subject to the following conditions:
(i) Goodwill of the firm is valued at Rs. 24,000
(ii) Machinery to be depreciated by 10%
(iii) Buildings to be appreciated by 20%
(iv) Stock to be appreciated by Rs. 2,000
(v) Provision for bad debts to be raised by Rs. 1,000
(vi) Final amount due to Ramesh is not paid immediately
Prepare the necessary ledger accounts and show the balance sheet of the firm after retirement.

15.

Charles, Muthu and Sekar are partners, sharing profits in the ratio of 3 : 4 : 2. Their balance sheet as on 31^st December, 2018 is as under:

Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Furniture	20,000
Charles	30,000		Stock	40,000
Muthu	40,000		Debtors	30,000
Sekar	20,000	90,000	Cash at bank	42,000
Workmen compensation fund		27,000	Profit and loss A/c (loss)	18,000
Sundry creditors		33,000
		1,50,000		1,50,000

On 1.1.2019, Charles retired from the partnership firm on the following arrangements.
(i) Stock to be appreciated by 10%
(ii) Furniture to be depreciated by 5%
(iii) To provide Rs. 1,000 for bad debts
(iv) There is an outstanding repairs of Rs. 11,000 not yet recorded
(v) The final amount due to Charles was paid by cheque
Prepare revaluation account, partners’ capital account and the balance sheet of the firm after retirement.

16.

Mani, Rama and Devan are partners in a firm sharing profits and losses in the ratio of 4 : 3 : 3. Their balance sheet as on 31^st March, 2019 is as follows:

Liabilities	Rs.	Rs.	Asset	Rs.
Capital accounts:			Buildings	80,000
Mani	50,000		Stock	20,000
Rama	50,000		Furniture	70,000
Devan	50,000	1,50,000	Debtors	20,000
Sundry creditors		20,000	Cash in hand	10,000
Profit and loss A/c		30,000
		2,00,000		2,00,000

Mani retired from the partnership firm on 31.03.2019 subject to the following adjustments:
(i) Stock to be depreciated by Rs. 5,000
(ii) Provision for doubtful debts to be created for Rs. 1,000.
(iii) Buildings to be appreciated by Rs. 16,000
(iv) The final amount due to Mani is not paid immediately
Prepare revaluation account and capital account of partners after retirement.

17.

John, James and Raja are partners in a firm sharing profits and losses equally. Their balance sheet as on 31st March, 2019 is as follows:
Raja retired on 31^st March, 2019 subject to the following conditions:
(i) Machinery is valued at Rs. 1,30,000
(ii) Value of office equipment is brought down by Rs. 2,000
(iii) Provision for doubtful debts should be increased to Rs. 3,000
(iv) Investment of Rs. 25,000 not recorded in the books is to be recorded now
Pass necessary journal entries and prepare revaluation account.

18.

Prabu, Ragu and Siva are partners sharing profits and losses in the ratio of 3:2:1. Prabu retires from partnership on 1^st April 2017. The following adjustments are to be made:
(i) Increase the value of building by Rs. 12,000
(ii) Reduce the value of furniture by Rs. 8,500
(iii) A provision would also be made for outstanding salary for Rs. 6,500.
Give journal entries and prepare revaluation account.

19.

Ramya, Sara and Thara are partners sharing profits and losses in the ratio of 5:3:2. On 1^st April 2018, Thara retires and on retirement, the following adjustments are agreed upon:
(i) Increase the value of premises by Rs. 40,000.
(ii) Depreciate stock by Rs. 3,000 and machinery by Rs. 6,500.
(iii) Provide an outstanding liability of Rs. 500
Pass journal entries and prepare revaluation account.

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Answers Key:

Generic 5

19 x 5 = 95

Dr Revaluation Account Cr
Particulars	Rs	Rs	Particulars	Rs
To Stock A/c		5,000	By Buildings A/c	20,000
To Profit on revaluation
transferred to
Vijayan's capital A/c
(15,000 \(\times\) 5/12)	7,000
Sudhan's capital A/c
(15,000 \(\times\) 4/12)	5,000
Suman's capital A/c	3,000	15,000
(15,000 \(\times\) 3/12)
		20,000		20,000

Dr Capital Account Cr
Particulars	Vijayan Rs	.Sudhan Rs	Suman Rs	Particulars	Vijayan Rs	Sudhan Rs	Suman Rs
To Suman's				By Balance b/d	70,000	50,000	30,000
capital A/c	4,200	3,000	-	By Gene
To Suman's				reserve	8,400	6,000	3,600
To Balance c/d	81,200	58,000	-	A/c (profit)	7,000	5,000	3,000
				By Vijayan's
				capital A/c			4,200
				BySudhan's
				capital A/c			3,000

	85,400	61,000	43,800		85,400	61,000	43,800
				By Balanced b/d	81,200	58,000	-

Balance Sheet as on 31st March 2019
Liabilities	Rs	Rs	Assets	Rs	Rs
Capital accounts			Building	80,000
Vijayan	81,200		Add: Appreciation	20,000	1,00,000
Sudhan	58,000	1,39,200	Stock	45,000
			Less: Deprec	5,000	40,000
Suman's Executor's A/c		43,800	Debtors		25.000
		17,000	Cash at bank		20,000
					15,000

		2,00,000			2,00,000

Working Notes:
(i) Profit sharing ratio = capital ratio = 70,000 : 50,000 : 30,000 that is 7 : 5 : 3
Gaining ratio between Vijayan and Sudhan = old profit sharing ratio = 7: 5
(ii) Calculation of current year's profit
Average profit = \(\cfrac { 40,000+50,000+30,000 }{ 3 } =\cfrac { 1,20,000 }{ 3 } =40,000\)

Current year's profit = \(40,000\times \cfrac { 3 }{ 12 } =10,000\)
Suman's Share of current year's profit = \(10,000\times \cfrac { 3 }{ 15 } =2,000\)
(iii) Suman's Share of good will = \(36,000\times \cfrac { 3 }{ 15 } =7,200\)
It is to be borne by Vijayan and Sudhan in the gaining ratio 7 : 5

Dr Revaluation Account Cr
Particulars	Rs	Rs	Particulars	Rs
To Stock A/c		5,000	Premises A/c	24,000
To Debtors A/c		4,000
To Profit on revaluation
transferred to
Marsha's capital A/c	6250
(15,000 x 5/12)
Shanthi's capital A/c	5,000
(15,000 x 4/12)
Madhuri's capital A/c	3,750	15,000
(15,000 x 3/12)
		24,000		24,000

Dr Capital Account Cr
Particulars	Varsha Rs	Shanthi Rs	Madhuri Rs	Particulars	Varsha Rs	Shanthi Rs	Madhuri Rs
To Profits and				By Balance b/d	80,000	60,000	20,000
loss A/c	5000	4,000	3,000	By General
To Madhuri's				reserve A/c	20,000	16,000	12,000
Executor's A/c	-	-	32,750	By Revaluation
To Balance c/d	1,01,250	77,000	-	Alc (profit)	6,250	5,000	3,750

	1,06,250	81,000	35,750		1,06,250	81,000	35,750
				By Balance b/d	1,01,250	77,000	-

Balance Sheet as on 31st December 2017
Liabilities	Rs	Rs	Assets	Rs	Rs
Capital Account			Premises	1,20,000
Varsha	1,01,250		Add:
Shanthi	77,000	1,78,250	Appreciation	24,000	1,44,000
Madhuri's			Stock	40,000
Executor's A/c		32,750	Less: Depreciation	5,000	35,000
Sundry creditors		32,000
			Debtors	50,000
			Less: Bad debts	4,000
			Cash at bank		46,000
					18,000

		2,43,000			2,43,000

Dr Revaluation A/c Cr
Particulars	Rs	Particulars	Rs	Rs
To Machinary A/c	30,000	By Profit on revaluation transferred
To Stock A/c	10,000	Rajesh capital A/c	24,000
To Debtors A/c	8,000	\(\left( 48,000\times \cfrac { 3 }{ 6 } \right) \)
		Sathish's capital A/c	16,000
		\(\left( 48,000\times \cfrac { 2 }{ 6 } \right) \)
		Mathan's capital A/c	8,000	48,000
		\(\left( 48,000\times \cfrac { 1 }{ 6 } \right) \)
	48,000			48,000

Dr Capital Account Cr
Particulars	Rajesh Rs	Sathish Rs	Mathan Rs	Particulars	Rajesh Rs	Sathish Rs	Mathan Rs
To Mathan's capital A/c	12,000	28,000	-	By Balance b/d	4,00,000	3,00,000	2,50,000
To Revaluation A/c	24,000	16,000	8,000	By General
To Mathans loan A/c	-	-	3,02,000	revenue	60,000	40,000	20,000
To Balance c/d	4,24,000	2,96,000	-	By Rajesh's
				capital A/c	-	-	12,000
				By Mathans
				capital A/c	-	-	28,000

	4,60,000	3,40,000	3,10,000		4,60,000	3,40,000	3,10,000
				By Balance b/d	4,24,000	2,96,000	-

NOTE:
(i) Computing of gaining ratio
Share gained = New share - Old Share
Rajesh =\(\cfrac { 3 }{ 5 } -\cfrac { 3 }{ 5 } =\cfrac { 18-25 }{ 30 } =\cfrac { 3 }{ 30 } \)

Sathish = \(\cfrac { 2 }{ 5 } -\cfrac { 1 }{ 6 } =\cfrac { 12-5 }{ 30 } =\cfrac { 7 }{ 30 } \)
Therefore, the gaining of Rajesh and Sathish is 3:7
(ii) Adjustment for goodwill
Goodwill of the firm = Rs. 1,20,000
Share of goodwill of Mathan = \(Rs.1,20,000\times \cfrac { 2 }{ 6 } =Rs.40,000\)
It is to be adjusted in the capital accounts of Rajesh and Sathis in the gaining ratio 3:7
That is,
Rajesh : \(40,000\times \cfrac { 3 }{ 10 } =Rs.12,000\)
Sathish : \(40,000\times \cfrac { 7 }{ 10 } =Rs.28,000\)

Balance Sheet as on 31st March 2017
Liabilities	Rs	Rs	Assets	Rs	Rs
Capital accounts			Premises		4,00,000
Rajesh	4,24,000		Machinery	4,20,000
Sathish	2,96,000	7,20,000	Less: Depreciation	30,000	3,90,000

Mathans loan A/c		3,02,000	Debtors	1,60,000
Creditors		50,000	Less: Depreciation	8,000	1,52,000
Bills payable		1,80,000
			Stock	3,00,000
			Less: Depreciation	10,000	2,90,000

			Cash at bank

		12,52,000			12,52,000

Dr Revaluation A/c Cr
Partivulars	Rs	Rs	Particulars	Rs
To StockA/c		2,000	By Machinery AI/c	4,000·
To Provision for bad debts		1,000	By Building A/c	20,000
To Profit on revaluation
transferred to
Saran's capital A/c	8,400
Arun's capital A/c	6,300
Karan's capital a/c	6,300	21,000
		24,000		24,000

Dr Capital Account Cr
Particulars	Saran Rs	Arun Rs	Karan Rs	Particulars	Saran Rs	Arun Rs	Karan Rs
To Karan's capital A/c	3,600	2,700	-	By Balance b/d	60,000	50,000	40,000
To Karan's loan A/c	-	-	57,100	By Reserve fund A/c	6,000	4,500	4,500
To Balance c/d	70,800	58,100	-	By Revaluation A/c	8,400	6,300	6,300
				By Saran's capital A/c	-	-	3,600
				By Arun's capital A/c	-	-	2,700
	74,400	60,800	57,100		74,400	60,800	57,100
				By Balance b/d	70,800	58,100	-

Balance Sheet as on 31st January 2017
Liabilities	Rs	Rs	Assets	Rs	Rs
Capital Accounts	-		Buildings	60,000
Saran	70,800		Add: Appreciation	20,000	80,000
Arun	58,100	1,28,900
Karan's loan		57,100	Add: Appreciation	4,000	44,000
Sundry creditors		35,000	Investment		20,000
			Stock	12,000
			Less: Depreciation	2,000	10,000
			Debtors	25,000
			Less: Provision for bad Debts	2,000	23,000

			Cash at bank		44,000
		2,21,000			2,21,000

NOTE:
1. As new profit sharing ratio and proportion of gain is not given, it is assumed that the continuing partners gain in their old profit sharing ratio of 4 : 3 ratio.
2. Karan share of goodwill = \(21,000\times \cfrac { 3 }{ 10 } \)
= Rs. 6,300
Goodwill of Karan to be borne by
Saran: 6,300 \(\times\) 4/7 = 3,600
Arun: 6,300 \(\times\) 3/7 = 2,700

Dr Revaluation A/c Cr
Particulars	Rs	Particulars	Rs	Rs
To stock A/c	1,000	By Building A/c		9,000
To Deptors A/c	1,000	By Loss on revaluation transferred to
To Unrecorded liability A/c	8,000
		Kannans capital A/c	500
		Rahim's capital A/c	300
		John's capital A/c	200
				1,000
	10,000			10,000

Dr Capital Account Cr
Particulars	Kannan Rs	Rahim Rs	John Rs	Particulars	Kannan Rs	Rahim Rs	John Rs
To Profit and Loss A/c	10,000	6,000	4,000	By Balance b/d	1,00,000	80,000	40,000
To Revaluation A/c	500	300	200	By Workmens Compensation fund	15,000	9,000	6,000
To Bank	-	-	41,800	compensation
To Balance c/d	1,04,500	82,700	-	fund	15,000	9,000	6,000

	1,15,000	89,000	46,000		1,15,500	89,000	46,000
				By Balance b/d	1,04,500	82,700

Balance Sheet as on 31st December 2017
Liabilities	Rs	Rs	Assets	Rs	Rs
Capital accounts			Buildings	90,000
			Add:Appreciation	9,000	99,000
Kannan	1,04,500		Machinary		60,000
Rahim	82,700	1,87,200
			Deptors	30,000
Sudry creditors		20,000	Less,Bad debts	1,000	29,000
Unrecorded liability		8,000
			Stock	20,000
			Less: Depreciation	1,000	19,000

			Cash at bank	50,000
			Less: Amount paid to John	41,800	8,200
		2,15,200			2,15,200

Dr Revaluation A/c Cr
Particulars	Rs	Rs	Particulars	Rs
To Stock A/c		10,000	By Buildings A/c	28,000
To Provision for doubtful debts
To Profit on revaluation transferred to		3,000
Manju's Capital A/c (15,000 x 5/10)	7,500
Charus capital A/c (15,000 x 3/10	4,500
Lavanya's capital A/c (15,000 x 2/10)	3,000	15,000

		28,000		28,000

Dr Capital Account Cr
Particulars	Manju Rs	Charu Rs	Lavanya Rs	Particulars	Manju Rs	Charu Rs	Lavanya Rs
To Balance c/d	-	89,500	83,000	By Balance b/d	70,000	70,000	70,000
To Manjus				By Revaluation A/c	7,500	4,500	3,000
loan A/c	1,02,500	-	-	By Profit and loss A/c	25,000	15,000	10,000

	1,02,500	89,500	83,000		1,02,500	89,500	83,000
				By Balance b/d	-	89,500	83,000

Journal entries
Date	Particulars		Debit Rs	Credit Rs
2018	Machinery A/c	Dr	30,000
March 31	To Revaluation A/c			30,000
	(Increase in the value of Machinery accounted)
2018	Revaluation AI c	Dr	12,000	10,000
March 31	To Furniture AI c
	To Provision for doubtful
	debts A/c
	(Furniture and provision made for doubtful debts adjusted)
2018	Investments A/c	Dr	30,000
March 31	To Revaluation A/c			30,000
	(Unrecorded investement brought into accounts)
2018	Revaluation A/c	Dr.	48,000
March 31	To Chandrus capital A/c			16,000
	To Vishal's capital A/c			16,000
	To Ramanans capital A/c			16,000
	(Parnosffietrroend retvoalcuaaptiitoanl account)

Dr Revaluation A/c Cr
Particulars	Rs	Rs	Particulars	Rs
To Furniture A/c		10,000	By Machinery A/c	30,000
To Provision for doubtful debts A/c		2,000	By Investments A/c	30,000
To Profit on revaluation transferred to
Chandrus capital A/c (48,000 x 113)	16,000
Vishal's capital A/c (48,000 x 113)	16,000
Ramanan's capital A/c (48,000 x 113)	16,000
		48,000
		60,000		60,000

Journal entries
Date	Particulars		Debit Rs	Credit Rs
2018 April 1	Land and building A/c	Dr	18,000
	To Revaluation A/c			18,000
	(Increase in the value of building accounted)
2018 April 1	Revaluation A/c	Dr.	23,000
	To Machinery A/c			15,000
	To Outstanding expenses A/c			8,000
	(Reduction in the value of machinery
	and outstanding expenses accounted)
2018 April 1	Vinoth's capital A/c	Dr	2,000
	Karthi's capital A/c	Dr.	2,000
	Pranar's capital A/c	Dr	1,000
	To Revaluation A/c			5,000
	(Loss on revaluation transferred to
	capital accounts)

**Dr Revaluation A/c Cr**
Particulars	Rs	Particulars	Rs	Rs
To Machinery A/c	15,000	By Land and building A/c		18,000
To Outstanding expenses A/c	8,000	By Loss on revaluation transferred to
		Vinoth's capital A/c (5,000 x 2/5)	2,000
		Karthi's capital A/c (5,000 x 2/5)	2,000
		Prana's capital A/c (5,000 x 1/5)	1,000
				5,000
	23,000			23,000

Journal entries
Date	Particulars		Debit Rs	Credit Rs
2017	Building A/c	Dr	30,000
April 1	To Revaluation A/c			30,000
	(Value of building inreased)
2017	Revaluation A/c	Dr	18,000
April1	To Stock A/c			5,000
	To Furniture A/c			12,000
	To Outstanding liability A/c			1,000
	(Decrease in value of assets and outstanding liability recorded
2017	Revaluation A/c	Dr	12,000
April1	To Roja's capital A/c			4,800
	To Neela's capital A/c			3,600
	To Kanaga's capital A/c			3,600
	(profit on recaluation distributed)

Dr Revaluation Account Cr
Particulars	Rs	Rs	Particulars	Rs
To Stock A/c		5,000	By Building A/c	30,000
To Furniture A/c		12,000
To Outstanding liability A/c		1,000

To Profit on revaluation transferred to
Roja's capital A/c	4,800
Neela's capital A/c	3,600
Kanaga's capital A/c	3,600
		12,000
		30,000		30,000

10.

Basic Sacrificing ratio Gaining ratio 1. Meaning It is the proportion of the profit which is sacrificed by the old partners in favour of a new partner It is the proportion of the profit which is gained by the continuing partners from the retiring partner 2. Purpose It is calculated to determine the amount to be adjusted towards goodwill for the sacrificing partners It is calculated to determine the amount to be adjusted towards goodwill for the gaining partners 3. Method of Calculation It is the difference between the old ratio and the new ratio Sacrificing ratio = Old profit sharing ratio - New profit sharing ratio It is the difference between the new ratio and the old ratio Gaining ratio = New profit sharing ratio - Old profit sharing ratio 4. Time of calculation It is calculated at the time of admission of a new partner It is calculated at the time of retirement of a partner

11.

Dr. Revaluation Account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Stock A/c		1,000	By Plant and Machinery A/c	9,000
To Profit on revaluation transferred to
Ramesh’s capital A/c (3/8	3,000
Ravi’s capital A/c (3/8)	3,000
Akash’s capital A/c (2/8)	2,000	8,000
		9,000		9,000

Dr. Capital Account Cr.
Particulars	Ramesh Rs.	Ravi Rs.	Akash Rs.	Particulars	Ramesh Rs.	Ravi Rs.	Akash Rs.
To Akash’s capital A/c	3,000	3,000		By Balance b/d	30,000	30,000	20,000
To Akash’s Executor A/c			34,000	By General reserve A/c	3,000	3,000	2,000
To Balance c/d	33,000	33,000		By Revaluation A/c (profit)	3,000	3,000	2,000
				By Profit and loss suspense A/c			4,000
				By Ramesh’s capital A/c			3,000
				By Ravi’s capital A/c			3,000
	36,000	36,000	34,000		36,000	36,000	34,000
				By Balance b/d	33,000	33,000

Balance Sheet as on 31st December, 2018
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital accounts:			Plant and machinery	45,000
Ramesh	33,000		Add: Appreciation	9,000	54,000
Ravi	33,000	66,000	Stock	22,000
Akash’s Executor’s A/c		34,000	Less: Depreciation	1,000	21,000
Sundry creditors		8,000	Debtors		15,000
			Cash at bank		10,000
			Cash in hand		4,000
			Profit and loss suspense A/c		4,000
		1,08,000			1,08,000

(i) Profit sharing ratio
Profit sharing ratio = Capital ratio = 30,000: 30,000: 20,000 that is, 3:3:2
Gaining ratio between Ramesh and Ravi = Old profit sharing ratio = 3:3 that is 1:1
(ii) Calculation of Akash’s share of current year’s profit
Average profit = \(\frac{66, 000 +60, 000+ 66, 000 +1,92, 000}{3} = 64,000\)
Current year’s profit upto the date of death = 64,000 × 3/12 = Rs.16,000
Akash’s share of current year’s profit = 16,000 × 2/8 = Rs. 4,000
(iii) Akash’s share of goodwill = 24,000 × 2/8 = Rs. 6,000
It is to be borne by Ramesh and Ravi in the gaining ratio of 1:1

12.

Dr. Revaluation Account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Stock A/c		2,000	By By Land A/c	11,000
To Debtors A/c		3,000
To Profit on revaluation transferred to
Sundar’s capital A/c (3/6)	3,000
Vivek’s capital A/c (2/6)	2,000
Pandian’s capital A/c (1/6)	1,000	6,000
		11,000		11,000

Dr. Capital Account Cr.
Particulars	Sundar Rs.	Vivek Rs.	Pandian Rs.	Particulars	Sundar Rs.	Vivek Rs.	Pandian Rs.
To Profit and loss A/c	3,000	2,000	1,000	By Balance b/d	50,000	40,000	10,000
To Pandian’s Executor A/c			16,000	By General reserve	18,000	12,000	6,000
To Balance c/d	68,000	52,000		By Revaluation A/c (profit)	3,000	2,000	1,000

	71,000	54,000	17,000		71,000	54,000	17,000
				By Balance b/d	68,000	52,000

Balance Sheet as on 1st January, 2019
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital account:			Land	80,000
Sundar	68,000		Add: Appreciation	11,000	91,000
Vivek	52,000	1,20,000	Stock	20,000
Pandian’s Executor A/c		16,000	Less: Decrease	2,000	18,000
Sundry creditors		14,000	Debtors	30,000
			Less: Decrease	3,000	27,000
			Cash at bank		14,000
		1,50,000			1,50,000

13.

Dr. Revaluation Account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Machinery A/c		2,000	By Stock A/c	7,000
To Debtors A/c		2,000
To Profit on revaluation transferred to
Muthu's capital A/c	1,500
Murali's capital A/c	500
Manoj's capital A/c	1,000	3,000
		7,000		7,000

Dr. Capital Account Cr.
Particulars	Muthu Rs.	Murali Rs.	Manoj Rs.	Particulars	Muthu Rs.	Murali Rs.	Manoj Rs.
To Manoj’s capital A/c	3,000	7,000	-	By Balance b/d	20,000	25,000	20,000
To Manoj's loan A/c			33,000	By General reserve A/c	3,000	1,000	2,000
To Balance c/d	21,400	19,500		By Revaluation A/c (profit)	1,500	500	1,000
				By Muthu’s capital A/c			3,000
				By Manoj’s capital A/c	-	-	7,000
	24,500	26,500	33,000		24,500	26,500	33,000
				By Balance b/d	21,500	19,500

Balance sheet as on 31st March 2019
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital accounts:			Machinery	45,000
Muthu	21,500		Less: Depreciation	2,000	43,000
Murali	19,500	41,000	Furniture		5,000
Manoj’s loan A/c		31,000	Debtors	30,000	63,000
Creditors		29,000	Less: Provision for bad debts	2,000	28,000
			Stock	20,000
			Add: Appreciation	7,000	27,00
		1,03,000			1,03,000

(i) Computation of gaining ratio
Share gained = New share – old share
Muthu = \(\frac{3}{5}-\frac{3}{6}= \frac{18-15}{30}=\frac{3}{30} \)
Murali = \(\frac{2}{5}-\frac{1}{6}= \frac{12-5}{30}=\frac{7}{30} \)
Therefore, the gaining ratio of Muthu and Murali is 3:7
(ii) Adjustment for goodwill
Goodwill of the firm = Rs. 30,000
Share of goodwill to Manoj = 30,000 × \(\frac{2}{6}\) = Rs. 10,000
It is to be adjusted in the capital accounts of Muthu and Murali in the gaining ratio of 3:7
That is,
Muthu : 10,000 × \(\frac{3}{10}\) = Rs. 3,000
Murali : 10,000 × \(\frac{3}{10}\) = Rs. 7,000

14.

Dr. Revaluation Account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Machinery A/c		7,000	By Buildings A/c	12,000
To Provision for bad debts A/c		1,000	By Stock A/c	2,000
To Profit on revaluation transferred to
Raghu’s capital A/c (2/6)	2,000
Ravi’s capital A/c (3/6)	3,000
Ramesh capital A/c (1/6)	1,000	6,000
		14,000		14,000

Dr. Capital Account Cr.
Particulars	Raghu Rs.	Ravi Rs.	Ramesh Rs.	Particulars	Raghu Rs.	Ravi Rs.	Ramesh Rs.
To Ramesh’s capital A/c	1,600	2,400	-	By Balance b/d	30,000	40,000	20,000
To Ramesh’s loan A/c			31,000	By Reserve fund A/c	12,000	18,000	6,000
To Balance c/d	42,400	58,600	-	By Revaluation A/c	2,000	3,000	1,000
				By Raghu's capital A/c	-	-	1,600
				By Ravi's capital A/c	-	-	2,400
	44,000	61,000	31,000		44,000	61,000	31,000
				By Balance b/d	42,400	58,600

Balance sheet as on 31st March 2019
Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital accounts:			Buildings	60,000
Raghu	42,400		Add: Appreciation	12,000	72,000
Ravi	58,600	1,01,000	Machinery	70,000
Ramesh’s loan		31,000	Less: Depreciation	7,000	63,000
Sundry creditors		50,000	Stock	20,000
			Add: Appreciation	2,000	22,000
			Debtors	18,000
			Less: Provision for bad debts	2,000	16,000
			Cash at bank		9,000
		1,82,000			1,82,000

15.

Dr. Revaluation Account Cr.
Particulars	Rs.	Particulars		Rs.
To Furniture A/c	1,000	By Stock A/c		4,000
To Provision for bad debts A/c	1,000	By Loss on revaluation transferred to
To Outstanding repairs	11,000	Charles capital A/c (3/9)	3,000
		Muthu’s capital A/c (4/9)	4,000
		Sekar’s capital A/c (2/9)	2,000	9,000
	13,000			13,000

Dr. Capital Account Cr.
Particulars	Charles Rs.	Muthu Rs.	Sekar Rs.	Particulars	Charles Rs.	Muthu Rs.	Sekar Rs.
To Profit and loss A/c	6,000	8,000	4,000	By Balance b/d	30,000	40,000	20,000
To Revaluation A/c (loss	3,000	4,000	2,000	By Workmen’s compensation fund	9,000	12,000	6,000
To Bank	30,000	-	-
		40,000	20,000
	39,000	52,000	26,000		39,000	52,000	26,000
				By Balance b/d	-	40,000	20,000

Balance Sheet as on 1st January 2019
Liabilities	Rs.	Rs.	Asset	Rs.	Rs.
Capital accounts:			Furniture	20,000
Muthu	40,000		Less: Depreciation	1,000	19,000
Sekar	20,000	60,000	Stock	40,000
Sundry creditors		33,000	Add: Appreciation	4,000	44,000
Outstanding repairs		11,000	Debtors	30,000
			Less: Provision for bad debts	1,000	29,000
			Cash at bank	42,000
			Less: Amount paid to Charles	30,000
		1,04,000			1,04,000

16.

Dr. Revaluation Account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Stock A/c		5,000	By Buildings A/c	16,000
To Provision for doubtful debts A/c		1,000
To Profit on revaluation transferred to
Mani’s capital A/c (4/10)	4,000
Rama’s capital A/c (3/10)	3,000
Devan’s capital A/c (3/10)	3,000	10,000
		16,000		16,000

Dr. Capital Account Cr.
Particulars	Mani Rs.	Rama Rs.	Devan Rs.	Particulars	Mani Rs.	Rama Rs.	Devan Rs.
To Mani’s loan A/c	66,000			By Balance b/d	50,000	50,000	50,000
To Balance c/d		62,000	62,000	By Revaluation A/c	4,000	3,000	3,000
				By Profit and loss A/c	12,000	9,000	9,000
	66,000	62,000	62,000		66,000	62,000	62,000
				By Balance b/d		62,000	62,000

17.

Journal entries
Date	Particulars		Debit Rs.	Credit Rs.
2019 March 31	Revaluation A/c	Dr.	13,000
	To Machinery A/c			10,000
	To Office equipment A/c			2,000
	To Provision for doubtful debts A/c			1,000
	(Depreciation on machinery and furniture andprovision made for doubtful debts adjusted)
"	Investments A/c	Dr.	25,000
	To Revaluation A/c			25,000
	(Unrecorded investments brought into accounts)
"	Revaluation A/c	Dr.	12,500
	To John’s capital A/c			4,000
	To James’s capital A/c			4,000
	To Raja’s capital A/c			4,000
	(Profit on revaluation transferred to capital accounts)

Dr. Revaluation Account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Machinery A/c		10,000	By Investments A/c	25,000
To Office equipment A/c		2,000
To Provision for doubtful debts		1,000
To Profit on revaluation transferred to
John’s Capital A/c (1/3)	4,000
James Capital A/c (1/3)	4,000
Raja’s Capital A/c (1/3)	4,000	12,000
		25,000		25,000

18.

Journal entries
Date	Particulars		Debit Rs.	Credit Rs.
2017 April 1	Building A/c	Dr.	12,000
	To Revaluation A/c			12,000
	(Increase in the value of building accounted)
"	Revaluation A/c	Dr.	15,000
	To Furniture A/c			8,500
	To Outstanding salary A/c			6,500
	(Reduction in the value of furniture and outstanding salary accounted)
"	Prabu’s capital A/c	Dr.	1,500
	Ragu’s capital A/c	Dr.	1,000
	Siva’s capital A/c	Dr.	500
	To Revaluation A/c			3,000
	(Loss on revaluation transferred to capital accounts)

Dr. Revaluation Account Cr.
Particulars	Rs.	Particulars	Rs.	Rs.
To Furniture A/c	8,500	By Building A/c		12,000
To Outstanding salary A/c	6,500	By Loss on revaluation transferred to
		Prabu’s capital A/c (3/6)	1,500
		Ragu’s capital A/c (2/6)	1,000
		Siva’s capital A/c (1/6)	500	3,000
	15,000			15,000

19.

Date	Particulars		Debit Rs.	Credit Rs.
2018 April 1	Premises A/c	Dr.	40,000
	To Revaluation A/c			40,000
	(Value of premises increased)
"	Revaluation A/c	Dr.	10,000
	To Stock A/c			3,000
	To Machinery A/c			6,500
	To Outstanding liability A/c			500
	(Decrease in value of assets and outstanding liability recorded)
"	Revaluation A/c	Dr.	30,000
	To Ramya's capital A/c			15,000
	To Sara's capital A/c			9,000
	To Thara's capital A/c			6,000
	(Profit on revaluation distributed)

Dr. Revaluation account Cr.
Particulars	Rs.	Rs.	Particulars	Rs.
To Stock A/c		3,000	By Premises A/c	40,000
To Machinery A/c		6,500
To Outstanding liability A/c		500
To Profit on revaluation transferred to
Ramya's capital A/c (5/10)	15,000
Sara's capital A/c (3/10)	9,000
Thara's capital A/c (2/10)	6,000	30,000
		40,000		40,000